Optical media such as a Compact Disc (CD) or Digital Versatile Disc (DVD) as well as the associated hardware to read the optical media are very commonplace. Given that a typical single sided DVD can achieve a mere 10−13 dollars per bit stored, optical media represents, by far, the most cost-effective means for storing information today. Accordingly, optical media is perhaps the most widespread means of proliferating protected content. Optical media is also a primary target of fraudulent third parties such as pirates, forgers, or counterfeiters because no adequate means of detecting counterfeited optical media exists today.
Fraudulent activity can be distinguished, for example, for “piracy” vis-à-vis “counterfeiting”. Piracy relates to the situation in which a purchaser is confident that the purchased object is not genuine due to an uncharacteristically low price. However, the purchaser willingly executes the transaction. Such transactions do not typically translate into substantial revenues to the pirate, since the low transaction price is normally well below the market price for an authentic object. On the other hand, counterfeiting relates to a situation in which the seller defrauds the buyer into believing that the merchandise is authentic and collects the full market price for the product. In this case, the counterfeiter collects substantial revenue with profit margins typically higher than that of the original manufacturer due to lack of research and development, marketing costs, and so on.
According to Interpol, World Customs Organization and International Chamber of Commerce estimates that roughly 7-8% of world trade every year is in counterfeit goods. In particular, Glaxo-Smith-Kline in a study with the U.S. Food and Drug Administration estimated that counterfeit drugs account for 10% of the global pharmaceuticals market, while the Business Software Alliance (BSA) estimates that a staggering 36% of software sales worldwide are counterfeit. In addition, according to BSA, the Motion Picture Associate of America, the Recording Industry Association of America, and the International Federation of the Phonographic Industries, losses in the software, music, and movies industries due to counterfeiting far surpass the one billion dollar mark.